Business
Ontario cannabis execs sound alarm over alleged pay-to-play retail scheme
Canadian cannabis producers and brands increasingly are, in effect, paying Ontario retailers for shelf space and other special treatment for their products, according to industry executives.
These executives allege the effective use of so-called slotting fees threatens the survival of hundreds of independently owned retailers and craft cultivators, who lack the money and resources to finance such pay-to-play schemes.
The monthly fee can amount to tens of thousands of dollars or more, according to one industry source who declined to be identified for competitive reasons.
Slotting fees, common for decades in traditional retail, are a relatively new phenomenon in cannabis in both the United States and Canada.
In Ontario, regulators prohibit producers and brands from paying retailers for favorable “material” treatment.
In June, the province’s retail regulatory agency noted that cannabis “licensees are not allowed to ask for or accept material inducements.”
Industry officials allege that, to get around such restrictions, some producers and brands are instead paying cannabis retailers for their sales data to ensure their products get special treatment in Ontario’s hotly competitive retail market.
Industry officials told MJBizDaily the workaround falls into a quasi-legal gray area, given that brands and manufacturers aren’t paying directly for prime shelf or display space or an exclusive sales deal involving their product.
It’s quasi-legal because data sales are allowed so long as the price is “fair market value.”
“It’s rampant in the industry,” Owen Allerton, owner of Highland Cannabis, an independently owned store in Kitchener, told MJBizDaily.
“Everyone knows data agreements are a smokescreen for pay-to-play, or listing fees. Multiple licensed producers have pitched us on it.”
Executives such as Allerton say the agreements involve the sale of store data detailing consumer product purchases, accessories and sometimes gift cards.
Brands and producers theoretically could use such business intelligence to gauge which products are popular – or which are duds – among cannabis consumers.
The allegations have not been proven, so MJBizDaily is not identifying specific manufacturers or brands.
Undercut competitors
Industry executives say the scheme works like this: Cannabis producers, or agencies representing them, pay stores for their consumer data.
In return, those stores hand over their data, in addition to providing preferential treatment, which might cover anything from prime shelf space, or any shelf space, to exclusivity in rare instances.
Critics say the scheme gives large producers and retail chains, which have the financial might to outmuscle smaller competitors, an advantage.
Allerton said chain stores are able to undercut smaller competitors with the help of data fee revenue.
Independent stores “can’t pay their bills if they price-match. It’s creating this crazy unfair advantage,” he said.
He suggested that 1,000-1,200 “independent” stores among Ontario’s 1,600-plus regulated marijuana retailers are at risk from the practice.
The Alcohol and Gaming Commission of Ontario (AGCO), which regulates cannabis retail in the province, “responds to information or complaints it receives, including ones related to the sale of data that is an alleged inducement,” a spokesperson for the agency told MJBizDaily via email.
“The AGCO holds all licensees to high standards of compliance.
“We will always work with licensees to help them understand and meet their regulatory obligations and will also take regulatory action as appropriate, including education, warnings, monetary penalties, and in serious cases, suspension or revocation of a license.”
What’s allowed
Earlier this year, the AGCO clarified its rules involving the sale of store data.
“Licensed retailers may enter into agreements with (licensed producers) for the sale of data for business intelligence purposes,” the AGCO stated in a June notice.
The agency added that it “expects that the fee charged by the licensee and paid for by the LP should be at fair market value.”
Some experts say the agency, in its attempt to clarify those rules, opened up a legal gray area.
“The AGCO said if you’re going to do a data program, it has to be a market ‘fair’ rate. They didn’t say what fair means, so there’s this giant gray area of interpretation for what ‘fairness’ might be for what you pay for this kind of arrangement,” Rachel Colic, a cannabis branding specialist based in Toronto, told MJBizDaily.
Colic, who co-chairs the National Cannabis Business Coalition, a national working group spearheaded by the Canadian Chamber of Commerce, also said data programs can be incredibly useful when they’re done well.
“But I think cannabis is struggling to do them well at this time,” she said.
“I think they’re being abused right now for sure, and that’s to the detriment of the entire industry. It means only the biggest, most-capitalized companies are getting a seat at the important tables.”
What’s not allowed
The AGCO’s June clarification also spelled out what would be viewed as out of bounds.
The agency said it enforces a general prohibition “on agreements for items, benefits, or services” between retailers and licensed producers.
“In other words, licensees are not allowed to ask for or accept material inducements,” according to the AGCO rules.
The ban also covers retailers, or their employees, receiving “any benefits” from a licensed producer “tied to the sales performance of any given product or brand.”
Another example of a prohibited activity includes “retailers receiving cash or cash rebates, product or product rebates, or price discounts from LPs in exchange for listing particular products at below-market prices.”
According to the AGCO, if a store or its employees are likely to change their behavior toward a cannabis producer or its product “after receiving an item, benefit or service,” then the arrangement could be considered offside.
How it works
A senior official at a medium-sized cannabis producer, who requested anonymity, explained how the data sale scheme generally works.
The official said cannabis producers will pay retailers “for the right to be in the stores” through a monthly fee for their data, based on the number of products, or SKUs, that are involved, and the number of stores where the products are sold.
From an LP standpoint, the official said, some producers have paid up to 100,000 Canadian dollars ($75,000) per month.
“The big LPs pay too much money and the small LPs can’t afford it. It’s unsustainable, because as the (large) LPs consolidate or go bankrupt, (this revenue) is going to disappear,” the person said.
“Because we don’t pay $100,000 a month, like larger LPs, (our products) get put on the sidelines,” the official said.
Small producer raises alarm
Gord Nichol, owner and master grower at North 40 Cannabis, a small cannabis producer in northeastern Saskatchewan, said he doesn’t believe most data sales are really about data.
“They’re buying up shelf space by sending money to these retailers, which has a double effect,” he said.
“It’s no longer an even playing field for the retailers or producers who don’t want to get involved in these data deals.”
Nichol said some stores have their budtenders promote products from certain companies, steering customers toward certain products.
Nichol said he has no intention of paying anyone to give his products special treatment.
“I’ve had a retail chain tell me that when my products are on their shelves, it slows down the sales of companies that are paying for shelf space, and they have to maintain those levels of sales to maintain their data sale revenue,” he said.
“I could sell twice as much product as I do if these imposed restrictions (data deals) weren’t there.”
Nichol said he doesn’t see a need for new regulations.
He said regulators should enforce the rules that already exist.
“It restricts our ability to get in front of the customers, and let the customers make the choices,” Nichol said.
“It’s the consumers that are losing out also, when these inferior products that basically don’t deserve to be on shelves, and they’re only there because of the financial intertwining of the data deals and shelf placement.
“It’s completely unfair to small producers and consumers.”
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
AI & Technology
Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations
Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).
The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.
Trial Push Despite Multi-Million Euro Settlement
The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.
Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.
A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.
Allegations of VAT Evasion Through Marketplace Sellers
At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.
Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.
Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.
Italian Government Named as Affected Party
In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.
Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.
Multiple Investigations Add to Pressure
The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.
Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.
In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.
Amazon Denies Allegations
Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.
Broader Impact on Europe’s Digital Economy
If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.
With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.
Aviation
IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?
Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.
Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.
Root Cause: IndiGo’s Market Monopoly
The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.
This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.
Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.
Government Intervention and Regulatory Weakness
The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.
Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.
The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.
If Telecom Giants Fail: A National Paralysis
The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?
If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.
In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.
E-commerce Monopoly: Another Fragile Ecosystem
The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.
Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.
A Wake-Up Call for Regulators
The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.
As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.
Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.
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